Supply chain SNAFU

An industry insider outlines the multifarious problem.

Yesterday I rented a boat and took the leader of one of Flexport’s partners in Long Beach on a 3 hour of the port complex. Here’s a thread about what I learned.

First off, the boat captain said we were the first company to ever rent his boat to tour the port to see how everything was working up close. His usual business is doing memorial services at sea. He said we were a lot more fun than his regular customers.

The ports of LA/Long Beach are at a standstill. In a full 3 hour loop through the port complex, passing every single terminal, we saw less than a dozen containers get unloaded.

There are hundreds of cranes. I counted only ~7 that were even operating and those that were seemed to be going pretty slow.

It seems that everyone now agrees that the bottleneck is yard space at the container terminals. The terminals are simply overflowing with containers, which means they no longer have space to take in new containers either from ships or land. It’s a true traffic jam.

Right now if you have a chassis with no empty container on it, you can go pick up containers at any port terminal. However, if you have an empty container on that chassis, they’re not allowing you to return it except on highly restricted basis.

If you can’t get the empty off the chassis, you don’t have a chassis to go pick up the next container. And if nobody goes to pick up the next container, the port remains jammed.

WIth the yards so full, carriers / terminals are being highly restrictive in where and when they will accept empties.

Also containers are not fungible between carriers, so the truckers have to drop their empty off at the right terminal. This is causing empty containers to pile up. This one trucking partner alone has 450 containers sitting on chassis right now (as of 10/21) at his yards.

This is a trucking company with 6 yards that represents 153 owner operator drivers, so he has almost 3 containers sitting on chassis at his yard for every driver on the team.

He can’t take the containers off the chassis because he’s not allowed by the city of Long Beach zoning code to store empty containers more than 2 high in his truck yard. If he violates this code they’ll shut down his yard altogether.

With the chassis all tied up storing empties that can’t be returned to the port, there are no chassis available to pick up containers at the port.

And with all the containers piling up in the terminal yard, the longshoremen can’t unload the ships. And so the queue grows longer, with now over 70 ships containing 500,000 containers are waiting off shore. This line is going to get longer not shorter.

This is a negative feedback loop that is rapidly cycling out of control that if it continues unabated will destroy the global economy.

Alright how do we fix this, you ask? Simple. And we can do it fast now,

When you’re designing an operation you must choose your bottleneck. If the bottleneck appears somewhere that you didn’t choose it, you aren’t running an operation. It’s running you.

You should always choose the most capital intensive part of the line to be your bottleneck. In a port that’s the ship to shore cranes. The cranes should never be unable to run because they’re waiting for another part of the operation to catch up.

The bottleneck right now is not the cranes. It’s yard space at the container terminals. And it’s empty chassis to come clear those containers out.

In operations when a bottleneck appears somewhere that you didn’t design for it to appear, you must OVERWHELM THE BOTTLENECK!

Miscellaneous side angles I haven’t seen or heard mention of anywhere other than in casual conversations with my brother and several of his coworkers at Horizon Freight:

  • Chassis are extremely scarce currently; my brother has been working only two-three days/week over the last two weeks because there are just too few chassis in Charleston available for use—no chassis, no haulee containers
  • Amazon has taken to reserving way more container space than they need, then offering to resell it to shippers at eight to ten times the usual rate, which adds up to a lot of empty space in a lot of containers
  • Horizon has two dispatchers responsible for assigning chassis and containers to specific drivers who are charged with hauling them out of the Charelston and Savannah ports. These dispatchers are absolutely worn to a frazzle, working frantically to get these containers out of the ports and on the road to their destinations, for a damned good reason: there’s a firm deadline by which each container MUST be removed from the port, usually only two-three days after arrival. After the deadline, the dispatcher her own self gets whacked with a several-thousand dollar fine…compounded EACH AND EVERY DAY said container doesn’t move, applicable to EACH INDIVIDUAL CONTAINER

I repeat: in shutting down entire national economies on a pretext that grows more threadbare each and every day, politicians and bureauweasels have meddled in affairs much too big for them. Contrary to their personal God Complex delusions, the extremely complicated, intricately interdependent, and fragile systems they wilfully fucked up are FAR beyond their meager ability to restart or repair. The unbridled arrogance and conceit of ProPols have created a catastrophe that the entire world can only watch unfold with horror and dread. There is no power on Earth capable of stopping what’s coming now.

Here’s a simple plan that @POTUS and @GavinNewsom partnered with the private sector, labor, truckers, and everyone else in the chain must implement TODAY to overwhelm the bottleneck and create yard space at the ports so we can operate again.

Not one proposal of which plan is ever going to happen.

This is not a comprehensive list. Please add to it. We don’t need to do the best ideas. We need to do ALL the ideas.

We must OVERWHELM THE BOTTLENECK and get these ports working again. I can’t stress enough how bad it is for the world economy if the ports don’t work. Every company selling physical goods bought or sold internationally will fail.

The circulatory system our globalized economy depends has collapsed. And thanks to the negative feedback loops involved, it’s getting worse not better every day that goes by.

I’d be happy to lead this effort for the federal or state government if asked. Leadership is the missing ingredient at this point.

Nope, nope, nope. One of BRM Peter’s commenters says it concisely and correctly.

government diddling caused this crap storm.

More government diddling will not fix it.

Nailed it. The one positive contribution federal and/or state governments might make here is also the one they’re wholly incapable of making: get the hell out of the way and allow the innumerable moving parts of the system of supply and logistics freely begin the slow and painful process of healing itself. Sadly, tragically for all of us, the self-styled Superior Beings who made this mess will never go along with it; such a thing is constitutionally beyond them, and goes against their nature. Their vanity, their bloated sense of their own importance, their every belief stands in direct opposition to the very concept. Indeed, they would resist any attempt at relaxing their grip on our throats to their dying breath. Which, y’know, can be easily arranged for them, and in fact ought to be.

Elsewhere, Karl digs down to unearth one of the deepest roots of our sorry situation.

I get it that everyone would like to just wave a magic wand and make the problem go away. There are people out there who claim they can — and have. They’re wrong. I may not be the CEO of Flexport but you shall see that going from a 2-stack to either 4 or 6 (depending on approvals) in the trucking company yards will solve nothing; the problem simply does not lie there.

The problem is that all the constraints have produced a labor shortage end to end in various places, including in warehouses, transportation hubs, drivers and similar. As a result the freight is not being unloaded and the empties not being returned on schedule.

When the ship gets here and unloads its several thousand containers those containers must ultimately return to the source to be loaded again. If the cycle is interrupted and there are none to load for the return trip then the source will run out. Unloading more containers into a chain of events that is constrained all the way through does not accelerate the rate of return for the journey back to the source!

You have to return the cycle from unload time to the return of the empty to the port to its expected rate and time in-transit or you do nothing. That means getting rid of the reasons that problem exists – which all revolve around labor and working conditions.

Some of those have been building for quite some time but a hell of a lot of them are external and imposed by governments related to lockdowns, mandates of various sorts and similar. The former ones building for quite some time will take some time to resolve but the others can be removed on an instant basis by the very government entities who placed them.

Phew—transcribing all of Karl’s characteristic bolds, underlines, and italics is hard work. But the man ain’t wrong about the scarcity of willing grunt-workers. Why, one might almost start to wonder whether—after going on two years of lockdowns, business closures, and being paid handsomely to lounge about at home in one’s jammies—this all might possibly be more than happenstance, coincidence, or sheer bad luck. Yeah, I know, I know, excessive paranoia, a ridiculous conspiracy theory, sorry I brought it up.

All the same, though, we might want to ask ourselves: cui bono? Who benefits, that is, from tighter control over individual freedom and mobility; reinforcement of fear, uncertainty, and doubt; making 24-7 surveillance and tracking of the Serf Class much easier; increasing Serf Class dependence and helplessness, among other things? We wonders, yes we wonders.

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kennycan

Nuke DC from orbit and much of our problems will work their way out.

We may need to do that to Sacramento and San Francisco as well.

Last edited 1 month ago by kennycan
Barry

I may have a few others to add to the list…

Ironbear

Chicago. NYC. Los Angeles. Austin.

Detro- nah. Detroit already looks worse than if it had been nuked.

Barry

Normally I wouldn’t bet against Roger Penske. In his bid to bring motor city back, he’s met his match.

[…] eating at me is located (for the most part) in that part of the world though.   IE, The port of LA.  and all the shit falling apart there with delivery systems.  Systems that are spread far and wide and are starting to echo-back all the bullshit of the last […]

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